Equity Pledge Agreement Template for Germany

The Equity Pledge Agreement is a fundamental security document used in German financing transactions where shares or equity interests serve as collateral. It is particularly common in acquisition finance, project finance, and general corporate lending scenarios. The agreement creates a security interest (Pfandrecht) over shares in accordance with German law requirements, typically requiring notarization for validity. The document details the pledge arrangement, including the scope of pledged shares, secured obligations, voting rights, dividend arrangements, and enforcement mechanisms. It must comply with specific requirements under German law, particularly the German Civil Code (BGB) and, depending on the company type, either the Limited Liability Companies Act (GmbHG) or Stock Corporation Act (AktG). The agreement is essential in transactions where lenders require security over company ownership interests and is often part of a broader security package in financing arrangements.

1. Parties: Identification of the Pledgor, Pledgee, and the Company whose shares are being pledged

2. Background: Context of the pledge agreement, reference to any underlying facility or security agreements

3. Definitions and Interpretation: Definitions of key terms and interpretation rules, including references to any defined terms in underlying agreements

4. Creation of Pledge: Express creation of the pledge over the shares, including detailed description of pledged shares and compliance with German law requirements

5. Secured Obligations: Definition and scope of the obligations secured by the share pledge

6. Representations and Warranties: Pledgor's representations regarding ownership, authority, and absence of encumbrances

7. Perfection Requirements: Steps required to perfect the pledge under German law, including notification requirements

8. Voting Rights and Dividends: Provisions regarding exercise of voting rights and treatment of dividends pre- and post-enforcement

9. Enforcement: Enforcement procedures compliant with German law, including private sale and public auction options

10. Further Assurance: Obligations to execute additional documents and take necessary steps to maintain pledge

11. Power of Attorney: Grant of power of attorney for perfection and enforcement purposes

12. Notices: Communication procedures between parties

13. Governing Law and Jurisdiction: Confirmation of German law application and jurisdiction of German courts